Trade Wars against Allies are neither Normal nor Acceptable
Hours after President Donald Trump announced his intention to impose new tariffs on American imports of steel and aluminum, America’s allies anxiously waited for assurance they’d be spared from new taxes. Those hopes were dashed the very next morning, as the administration indicated there would be “no exemptions.” This new practice of waging a trade war against one’s allies is not only not normal, it is not acceptable.
There’s a popular myth that these new tariffs are aimed at China. That might make sense if China was one of America’s major trade partners in steel, but it isn’t. In 2017, China failed to make the list of the top 10 exporters of steel to the United States, falling behind India (which accounted for 2% of our imports). Those top 10 exporters made up 78% of our imports, with Canada being our biggest partner. Also on that list of 10 were South Korea, Japan, Germany, and Taiwan.
In fact, America is primarily waging a trade war with its allies. Given America’s complex and expansive network of alliances and trade treaties, there is no way to institute a blanket tariff on a commodity that does not negatively impact and weaken the position of its allies. Further, these allies are up against a global production market led by China, which currently produces around half of the world’s steel. How is it that the U.S. is hurting China’s competitive edge in steel by taxing its allies?
In Trump’s mind, trade wars themselves are “good and easy to win.” The world’s remarkable trade wars have, in fact, not been easy to win for anybody, let alone the United States. Set aside the fact that trade wars have often escalated to violent conflict for a moment. One of America’s broadest tariff spats with the rest of the world- the Smoot-Hawley Tariff Act- saw a 66% decline in global trade over 5 years. According to research from Cambridge University, there is a consensus among economists that this trade war exacerbated the Great Depression.
If trade wars have two main goals- to both protect domestic markets and weaken other nations’ abilities to compete- it’s clear that Trump only has one thing in mind, and that is U.S. domestic steel production. The administration does not appear to care about its alliances. With this reckless behavior, the United States simply will not have the alliances it now has. It will find that economic war against allies weakens us all while nations that are not good faith partners grow stronger. Through it all, if Trump’s tariffs do not produce the promised metal working jobs, this will be clear to everyone to have been a disastrous experiment in trade policy.